Takata Says the Final Results of Its Air Bag Probe May Take Longer Than Expected

August 5, 2016, 4:39 PM UTC
This picture taken on November 23, 2014 shows Japanese auto parts maker Takata's logo being displayed at an event in Yokohama, suburban Tokyo. Toyota said on November 27 the company is expanding a recall of cars with airbags made by auto parts maker Takata which have been linked to driver deaths. The world's biggest automaker said it would recall some 57,000 vehicles globally -- about 40,000 units in Japan and some 17,000 overseas -- while subsidiary Daihatsu would recall about 27,500 vehicles in Japan.Some 16 million vehicles from nearly a dozen automakers worldwide, also including Honda, BMW, Ford and General Motors, have been recalled over the problem. AFP PHOTO / Toru YAMANAKA (Photo credit should read TORU YAMANAKA/AFP/Getty Images)
Photograph by Toru Yamanaka — AFP/Getty Images

Final results of a third-party investigation into Takata’s (TKTDY) exploding air bags may take longer than expected, a spokesman of the embattled company said, likely delaying a process to apportion recall costs with its automaker clients.

The Japanese auto parts supplier said it had yet to determine how to divide costs for withdrawing its roughly 100 million air bag inflators, which have been classified as defective due to the tendency of some to explode suddenly.

The final results of the Takata-commissioned investigation will help in determining recall cost payments, which is key to establishing Takata’s liabilities as the company searches for a financial sponsor.

In its quarterly earnings report on Friday, Takata said it had received results from the investigation by Germany’s Fraunhofer Institute in late July, but a company spokesman said final results were still awaited.


Takata said the latest investigation results had not determined who was responsible for the defective air bags, which have been linked to at least 14 deaths and more than 150 injuries globally, mainly in the United States.

“Given the schedule with the investigation, the process may take longer than expected,” Takata spokesman Toyohiro Hishikawa said, while declining to give further details.

“If these were the final results, we could enter the stage of discussing cost sharing, but these results are not final,” he said, adding that the company was discussing the latest results with automaker clients.

Takata Chief Financial Officer Yoichiro Nomura said in May he expected the final results of the investigation around summer, and hoped to find a sponsor around autumn.

“While we are anticipating that the costs (for the recall) will be divided, they are difficult to estimate at the moment,” Takata said on Friday. Honda Motor (HMC) is Takata’s biggest client.

One of the world’s largest air bag suppliers, Takata is at the center of a massive global recall of its of air bag inflators, which can inflate violently, releasing metal shrapnel into vehicles.

The inflators in question contain the volatile chemical compound ammonium nitrate. Other investigations conducted by U.S. transport authorities and a group of automakers have shown that the compound can become unstable following prolonged exposure to hot conditions.

The company posted a one-third drop in first-quarter net profit to 2.1 billion yen, booking a special loss of 3.5 billion yen ($34.63 million) for air bag-related lawsuits in the United States. It also suffered a 4.4 billion yen hit from the impact of a strong yen. ($1 = 101.0600 yen)